Indian PM backs reforms after losing majority

Manmohan Singh defends decision to allow foreign supermarkets to set up shop after losing support of coalition ally.

Six cabinet ministers from the regional Trinamool Congress party handed in their resignations in New Delhi [AFP]

Manmohan Singh, India's prime minister, has defiantly defended reforms that resulted in the loss of his government's majority, saying he was forced to bolster growth and restore confidence.

In a rare televised address, Singh said on Friday he would be "failing in my duty as prime minister of this great country" if he did not take decisive action.

But the 79-year-old premier said talk of widespread job losses was wide of the mark.

Singh has been accused by his opponents of selling out the country to foreign interests, despite his insistence that there was no alternative.

"At times, we need to say 'no' to the easy option and say 'yes' to the more difficult one. This happens to be one such occasion," said Singh. "The time has come for hard decisions."

The premier's comments came as Trinamool, the main coalition ally of his Congress party, withdrew support from Singh's government over a 14 per cent hike in diesel prices and plans to let foreign supermarkets such as Walmart set up shop.

The withdrawal leaves Congress running a minority government, dependent on outside support from other parties and vulnerable to falling before scheduled elections in 2014.

India's economy grew by just 5.5 per cent in the second quarter of the year, its slowest rate in more than two years.

Ratings agencies have warned India's credit is in danger of being downgraded to junk status in the absence of decisive action from the government to cut its budget deficit, forecast at more than 5.0 per cent of GDP this fiscal year.

Investors' confidence

"We have to restore the confidence of foreign investors," said Singh. "Money does not grow on trees and that is why we have made these decisions."

Years of tension between Congress and Trinamool exploded last week after Singh's government announced his string of reforms.

Mamata Banerjee, head of Trinamool, had initially given the government 72 hours to withdraw the measures, then announced that her party would quit on Friday unless her demands were met.

The party's six ministers formally tendered their resignations to Singh on Friday afternoon, with all of its 19 legislators joining opposition ranks.

"We tendered our resignations and we have given our letter of withdrawal of support from the union government," Trinamool's Saugata Roy, who served as junior urban development minister, said.

'To grow together'

In an angry parting shot at her erstwhile ally, Banerjee accused Singh of allowing in foreign supermarkets in "an undemocratic and unethical manner".

"The government is selling out the country. You will lose your land, shops and livelihood if the decision is implemented," she said in her stronghold of Kolkata, as Singh dismissed such talk as fearmongering.

"Organised modern retailing is already present in our country and is growing," he said. "In a growing economy there is enough space for the big and small to grow together."

The government faces a broad alliance of opposing forces. Shopkeepers, traders and labourers blocked railway lines and closed markets across India on Thursday in a nationwide strike and protests organised by unions and opposition parties.

Neerja Chowdhury, an independent political analyst, said Singh had done little to silence his critics.

"I do not think that his appeal will make any difference. Protests against retail reforms will not stop," Chowdhury told the AFP news agency.

"All we can do is appreciate the fact that he has made an effort to come out and speak, which is a rarity in his case."

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